Company chiefs head to Paris for Franco-Italian naval merger talks

Italian shipbuilder Fincantieri will take majority control of the French shipyard STX under an agreement thrashed out between Paris and Rome to end a diplomatic row. (Loic Venance/AFP via Getty Images)

ROME — The heads of four companies involved in France and Italy’s bid to build a European “naval champion” will meet in Paris on Friday after government ministers gave the project a glowing progress report on Thursday.

The CEOs of shipyards Fincantieri and Naval Group, which are edging toward a merger, will meet with the heads of French and Italian systems companies Thales and Leonardo, said Fincantieri head Giuseppe Bono.

Hitherto, Fincantieri and Naval Group have manned a working group set up in September to plan the eventual integration between the two yards, which is designed to consolidate Europe’s fractured naval industry in the face of growing global competition.

French firm Thales, which provides systems to French naval vessels, already has an effective seat at the table in talks because it owns a 35 percent share in Naval Group.

Leonardo typically supplies radars and systems to Fincantieri ships, while Thales supplies Naval Group vessels, begging the question of which firm would get the contracts for jointly built ships in the future.

By: Tom Kington

Observers in Italy have warned that Italy’s Leonardo, which in turn acts as systems supplier to Italian naval vessels, risks being overlooked when systems are chosen for future Franco-Italian vessels.

One sticking point is that Naval Group produces combat management systems, as does Leonardo.

“Leonardo will be absolutely on board, it is part of this process,” said Italy’s industry minister, Carlo Calenda, on Wednesday. “It is already in the working groups in order to increase its work on combat management systems.”

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The ministers were given a progress report at the meeting by Fincantieri chief Bono and Naval Group CEO Hervé Guillou on talks to date on the shipyard fusion.

After the meeting, Pinotti said the deal was a “winner” for Europe, while Le Maire said Europe needed to integrate its industry and create a “global naval champion” or risk “disappearing.”

The naval deal is being planned in the wake of a civil deal that will see Fincantieri take over French shipyard STX. That deal, said Le Maire, would be concluded in “the next few days.”

The naval working group, which includes Bono, Guillou and two government representatives, each from France and Italy, will have its next meeting this month before preparing a blueprint for the accord by the end of June.

Speaking to reporters after the Rome meeting on Wednesday, Bono said Fincantieri and Naval Group might work together on a logistics vessel and a frigate, building on work carried out in Italy on the Italian Navy’s new PPA frigate and the French FTI frigate.

He said he saw no problem arising from March elections in Italy, which could see a change in government, arguing the “stability” in decision-making was guaranteed.